Watsonville Municipal Code Art. 2 Franchise Terms and Conditions

It shall be unlawful for any person to construct, install, or operate a Cable System in the City without a Franchise awarded pursuant to this Chapter.

(§ 1, Ord. 1054-98 C-M, eff. July 9, 1998)

Any Franchise granted shall be nonexclusive. The Grantor specifically reserves the right to grant, at any time, such additional Franchises for a Cable System or any component thereof, as it deems appropriate, subject to applicable State and Federal law.

(§ 1, Ord. 1054-98 C-M, eff. July 9, 1998)

(a) Grantor may grant any number of Franchises in the Franchise Area. Grantor may limit the number of Franchise Agreements granted, based upon, but not necessarily limited to, the requirements of applicable law and specific local considerations, such as:

(1) The capacity of the public rights-of-way to accommodate multiple coaxial cables, fiber, or related cable signal transmission lines in addition to the cables, conduits and pipes of the utility systems, such as electrical power, telephone, gas and sewage;

(2) The benefits that may accrue to Subscribers as a result of competition, such as lower rates and improved service;

(3) The disadvantages that may result from competition, such as the requirement for multiple pedestals on Subscriber’s property, and the disruption and damage arising from numerous excavations of the rights-of-way; and

(4) Each Grantee awarded a Franchise Agreement to serve the entire City shall offer Cable Service, in accordance with construction and service schedules mutually agreed upon between Grantor and Grantee, and consistent with applicable law.

(b) Grantor may require that any new Grantee be responsible for its own underground trenching and the costs associated therewith, if, in Grantor’s opinion, the rights-of-way in any particular area cannot feasibly accommodate additional cables.

(§ 1, Ord. 1054-98 C-M, eff. July 9, 1998)

Cable System Franchises authorized pursuant to this Chapter shall be for the following purposes:

(a) To provide that Grantee may engage in the business of providing Cable Television service to Subscribers within the designated service area;

(b) To provide that Grantee may erect, install, construct, repair, rebuild, reconstruct, replace, maintain, and retain cable, lines, related electronic equipment, supporting structures, appurtenances, and other property in connection with the operation of a Cable System in, on, over, under, upon, along, and across streets or other public places within the Franchise Area;

(c) To provide that Grantee may maintain and operate said Cable System for the origination, reception, transmission, amplification, and distribution of television and radio signals and for the delivery of Cable Services; and

(d) To set forth the obligations of a Grantee under the Franchise.

(§ 1, Ord. 1054-98 C-M, eff. July 9, 1998)

Franchise renewal may be allowed by the Grantor in accordance with applicable law, including, but not necessarily limited to, the Cable Communications Policy Act of 1984, as amended. Grantor and Grantee, by mutual consent, may enter into renewal negotiations at any time during the term of the Franchise Agreement. Grantee shall reimburse Grantor for all costs associated with processing and reviewing the application for renewal up to a maximum of Ten Thousand and no/100ths ($10,000.00) Dollars. Any amount larger than Ten Thousand and no/100ths ($10,000.00) Dollars must be negotiated in any Franchise renewal process. This amount shall be adjusted for inflation pursuant to the San Francisco Consumer Price Index for all consumers.

(§ 1, Ord. 1054-98 C-M, eff. July 9, 1998)

(a) A Franchise granted under this Chapter shall be for a fixed term established in the Franchise Agreement, and the term shall commence on the Grantor’s adoption of an ordinance or resolution authorizing the Franchise Agreement.

(b) A Franchise granted pursuant to this Chapter may in Grantee’s discretion be renewed upon application by the Grantee pursuant to the provisions of applicable State and Federal law and of this Chapter.

(§ 1, Ord. 1054-98 C-M, eff. July 9, 1998)

(a) Following the issuance and acceptance of the Franchise, Grantee shall pay to the Grantor a Franchise Fee in the amount set forth in the Franchise Agreement.

(b) The Grantor, on an annual basis, shall be furnished a statement within sixty (60) days of the close of the calendar year, either audited and certified by an independent Certified Public Accountant or certified by an officer of the Grantee, reflecting the Gross Annual Receipts and all payments, deductions and computations for the period covered by the payment. Upon ten (10) days prior written notice, Grantor shall have the right to conduct an independent audit of Grantee’s records for the three (3) year period immediately preceding such notice, in accordance with Generally Accepted Auditing Standards, and if such audit indicates a Franchise Fee underpayment of two (2%) percent or more, the Grantee shall assume all reasonable costs of such an audit; if the Franchise Fee underpayment is between zero (0%) percent and two (2%) percent, the Grantee will split equally with Grantor all reasonable costs of such an audit.

(c) Except as otherwise provided by law, no acceptance of any payment by a Grantee shall be construed as a release or as an accord and satisfaction of any claim the Grantor may have for further or additional sums payable as a Franchise Fee under this Chapter or for the performance of any other obligation of the Grantee.

(d) If any Franchise payment or recomputed amount is not paid on or before the dates specified in the Franchise Agreement, Grantee shall pay as additional compensation:

(1) An interest charge, computed from such due date, at an annual rate equal to ten (10%) percent or the legal rate, whichever is more during the period for which payment was due; and

(2) If a payment is late for forty-five (45) days or more, a late penalty payment of five (5%) percent of the amount due in order to defray those additional expenses and costs incurred by the Grantor by reason of delinquent payment.

(3) The Grantee shall pay all attorney’s fees incurred in collecting of unpaid amount.

(§ 1, Ord. 1054-98 C-M, eff. July 9, 1998)

(a) Any Person desiring a transfer of a Cable System Franchise shall file a transfer application with the Grantor. A nonrefundable transfer application fee of an amount up to Seven Thousand Five Hundred and no/100ths ($7,500.00) Dollars established by the Grantor shall accompany the application to reimburse the Grantor for all costs associated with processing and reviewing the application, including without limitation, costs of administrative review, financial, legal and technical evaluation of the applicant, consultants (including technical and legal experts and all costs incurred by such experts), notice and publication requirements with respect to the consideration of the application and document preparation expenses. In the event such costs exceed the application fee, the selected applicant(s) shall pay the difference to the City within thirty (30) days following receipt of an itemized statement of such costs.

(b) Grantee shall not sell, transfer, lease, assign, sublet or dispose of, in whole or in part, either by forced or involuntary sale, or by ordinary sale, contract, consolidation or otherwise, the Franchise or any of the rights or privileges therein granted, without the prior consent of the Grantor and then only upon such terms and conditions as may be prescribed by the Grantor, which consent shall not be unreasonably denied or delayed. Any attempt to sell, transfer, lease, assign or otherwise dispose of the Franchise without the consent of the Grantor shall be null and void. The granting of a security interest in any Grantee assets, or any mortgage or other hypothecation, shall not be considered a transfer for the purposes of this Section.

(c) The requirements of Subsection (a) of this Section 3-11.208 shall restrict any change in the control of Grantee. The word “control” as used in this Section is not limited to major stockholders or partnership interests, but includes actual working control in whatever manner exercised. If Grantee is a corporation, partnership, limited liability company or other business organization, prior approval of the Grantor shall be required where ownership or control of more than ten (10%) percent of the voting stock of Grantee is acquired by a person or group of persons acting in concert, none of whom own or control the voting stock of Grantee as of the effective date of the Franchise, singularly or collectively.

(d) Grantee shall notify Grantor in writing of any foreclosure or any other judicial sale of all or a substantial part of the Cable System of the Grantee or upon the termination of any lease or interest covering all or a substantial part of such Cable System. Such notifications shall be considered by Grantor as notice that a change in control of ownership of the Franchise has occurred and the provisions under this Section governing the consent of Grantor to such change in control ownership shall apply.

(e) In determining whether it shall consent to such change, transfer, or acquisition of control, Grantor may inquire into the financial and other qualifications of the prospective transferee or controlling party, and Grantee shall assist Grantor in any such inquiry. In seeking Grantor’s consent to any change of ownership or control, Grantee shall have the responsibility of insuring that the transferee completes an application in the form and substance reasonably satisfactory to Grantor, which application shall include information required under Subsections (a) through (h) of Section 3-11.302 of this Chapter. Grantee shall also provide such reasonable additional information that Grantor deems applicable. An application shall be submitted to Grantor not less than one hundred twenty (120) days before the proposed date of transfer. The transferee shall be required to establish that it possesses the qualifications and financial and technical capability to operate and maintain the Cable System and comply with all Franchise requirements for the remainder of the term of the Franchise Agreement. If, after considering the legal, financial, character, technical and other public interest qualities of the applicant and determining that they are satisfactory, the Grantor finds that such transfer is acceptable, the Grantor may allow the transfer and assign most of the rights and obligations of such Franchise as may be in the public interest. The consent of the Grantor to such transfer shall not be unreasonably withheld.

(f) Any financial institution having a pledge of the Grantee or its assets for the advancement of money for the construction and/or operation of the Franchise shall have the right to notify the Grantor that it or its designee satisfactory to the Grantor shall take control of and operate the Cable System, if a Grantee defaults in its financial obligations. Further, such financial institution shall also submit a plan for such operation within one hundred twenty (120) days of assuming such control that will insure continued service and compliance with all Franchise requirements during the term the financial institution exercises control over the system. The financial institution shall not exercise control over the system for a period exceeding one year unless extended by the Grantor in its discretion and during such period of time it shall have the right to petition the Grantor to transfer the Franchise to another Grantee. The Grantor shall have the right to terminate the Franchise at the end of the one year period of time that a financial institution exercises control over the system.

(§ 1, Ord. 1054-98 C-M, eff. July 9, 1998)

(a) Grantee shall design, construct and maintain the Cable System to have the capability to pass every dwelling unit in the City, subject to any service area line extension requirements of the Franchise documents.

(b) After service has been established by activating trunk and/or distribution cables for any Service Area, Grantee shall provide service to any requesting Subscriber within that Service Area within thirty (30) days from the request, provided that the Grantee is able to secure all rights-of-way and encroachment permits necessary to extend service to such Subscriber within such thirty (30) day period on reasonable terms and conditions mutually acceptable to Grantee and such subscriber.

(§ 1, Ord. 1054-98 C-M, eff. July 9, 1998)